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Firm rupee pushes IT stocks down
MUMBAI, India (Reuters) -- Shares in India's export-driven software companies have fallen as the rupee neared its highest close in three years Tuesday. The rupee firmed to 45.8750/8850 against the dollar, stretching gains in 2003 to 4.5 percent. It last closed near this level on September 15, 2000. The rise posed a threat to the profit margins of India's software services companies, which earn about 70 percent of their revenue from the United States. Infosys Technologies, the nation's No 2 software services exporter, shed 2.1 percent to 3,404.50 rupees and Satyam Computer Services, the fourth-biggest exporter, dropped 3.4 percent to 196.90 rupees. The fall pushed the 30-share BSE Sensex index down 0.10 percent to 3889.41 after it rallied about four percent in the previous three days. Commerce and Industry Minister Arun Jaitley said on Tuesday India's export performance in the current year has been satisfactory despite a hardening rupee. Merchandise exports have been growing at over 10 percent since the beginning of the financial year in April. Foreign funds have pumped in $146.6 million into Indian shares between August 1 and 8 after investing $1.3 billion between May and July. Last year, foreign funds invested only $740 million. The inflows have lifted the BSE index more than 32 percent from a six-month low in late April. "While foreign liquidity continues to be strong, higher domestic liquidity will help sustain momentum in the stock market," ABN AMRO Bank said in a note to its private banking clients. Overseas portfolio investors expect India's economy to grow more than six percent this year, up from 4.3 percent last year helped by good monsoon rainfall that is likely to boost farm output and domestic demand. The monsoon is the lifeline of Asia's third-largest economy as the farm sector accounts for 25 percent of GDP and employs about 70 percent of the country's more than a billion people. Stronger demand for manufactured goods at home and abroad helped India's industrial production rise 5.7 percent in June over the same period a year, data released on Tuesday showed. Industrial output grew 4.5 percent a year ago.
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